September 25, 2024
New Delhi, India
IEX Shares
Indian Energy Exchange (IEX) shares have seen a significant drop of nearly 17% in just two days following news of the proposed implementation of market coupling for power exchanges. On Wednesday, IEX shares dropped 6% to hit a low of ₹199.45 on the BSE, after falling by 12% on Tuesday to ₹211.60 from the previous close of ₹239.25.
The announcement of market coupling has triggered increased trading volume, with 18.40 lakh IEX shares traded by 1 PM on Wednesday, far surpassing the two-week average of 6.49 lakh shares. Similarly, 5.10 crore shares were traded on the NSE, as reported by ET Now.
What Is Market Coupling?
Market coupling aims to establish a unified price for electricity across the various power exchanges in India. The policy is expected to come into effect by the end of the fiscal year or the start of FY26.
Currently, IEX dominates the market with an 84% share. However, market coupling may pose new challenges for IEX, as the policy seeks to create a uniform price across all power exchanges by consolidating bids from different platforms. This move is expected to improve market efficiency and liquidity, leading to better resource allocation and fewer price discrepancies across exchanges.
Impact of Market Coupling on Power Exchanges
India has three power exchanges:
- Indian Energy Exchange (IEX)
- Power Exchange India Limited (PXIL)
- Hindustan Power Exchange Limited (HPX)
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Currently, these exchanges operate independently, with each setting its own Market Clearing Price (MCP) based on the buy and sell bids it receives. Market coupling will unify these prices, potentially reducing IEX’s dominance.
The Power Ministry has tasked the Grid Controller to conduct a pilot study on the technical feasibility of market coupling, with guidance from the Central Electricity Regulatory Commission (CERC). The study is expected to be completed next month, after which the timeline for implementation will be decided.
What’s Next for IEX?
While the drop in IEX shares reflects concerns over the impact of market coupling, the initiative is expected to enhance the overall efficiency of the power trading market. The move could lead to better price discovery, benefiting consumers and ensuring a more equitable market across different exchanges.
Investors will be closely watching the timeline for market coupling implementation and how this policy change will affect IEX’s dominant position in the power exchange market.
The drop in IEX shares highlights investor concerns about market coupling, but the initiative is set to bring greater efficiency to India’s power trading landscape.
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